4 Conclusion Shadow economies are an integral part of modern-day society. Shadow economies tend to be bigger in developing nations but decrease in size as these emerging countries modernise and government institutions improve. Developed economies, such as countries in the Eurozone, are designing policies to curb shadow economic activity. These measures aim to diminish the adverse effects of the shadow economy and range from improving deterrents and changing attitudes to creating better systems of taxation and regulation. Needless to say, shadow economies have helped shape the world we know
These shadow banks are involved in lending money to the people at a favourable rate (sometimes more than 20%) and are not regulated by the regulatory bodies of the country. It consists of risky lending products consisting of derivatives and securities lending. Since these banks don’t come under the regular banking system the Government is not able to control the liquidity flow that is happening because of these banks. In China the interest rates are set by the banks and not by the market forces. They possess a systematic risk for the economy and in case of China that would impact the whole world.
That is, China has to face the transitional risks. Since the market of China is opened to the world as RMB internalization, the economy of China is highly correlated to the economy of the world. Thus, anything happened in the global financial market will have influence on the economy of China, especially the exchange rate market. If there is a difference between the nominal exchange rate and the real exchange rate, then there will be an arbitrage opportunity. This will stimulate the short-term speculative capital from the global investors to the exchange rate market and therefore have an adverse effect to the stability of Chinese economy.
They are a conduit for social and economic policy. Comparatively, banks have extended in to other areas, which include insurance, loans, investments, real estate and other financial vehicles. Lastly, the final strength is that banks can create money, by using the reserve requirement to their advantage. However, if you have strengths you have weaknesses. One weakness is that, historically banks have lacked innovation.
The issue of interest-free banking came to the attention of Muslim intellectuals in the 1940’s and 1950’s. By this time economic and financial influences had produced a number of local and national banks established along the lines of interest-based foreign banks. They had started to bring the banking system and its services to the local population. By this time Governments of Muslim countries, particularly those, which gained political independence, had of necessity to engage in international financial transactions using banking systems. The requirement for commercial banking was recognized.
Discuss the income opportunities available to international banks and critically evaluate international banks operations in foreign markets to maximize shareholder value. The growth in foreign bank activity and international banking in general has been a major factor of financial system development. This paper will highlight some main characteristics of international banks and then discuss the income opportunities available to international banks. Then the focus is also evaluate international banks operation in foreign markets can maximize shareholder value. 1.
As a result, savings from the society dropped and it then affect the economic capital formation. Furthermore, financial institution charged high interest rate on loan to investors. Because of the high interest rate charged on loan, so the cost of loan will increase and this cause the investor no interested in investing at China. After that, this effects on the development of the productive sectors, the output of China become less and in turn affect in economic
Sustainable development has also become very familiar among the banks concerns (Jeucken, 2001). Many banks will commit themselves to reduce energy consumption by favouring the use of recycling papers, energy saving bulbs and renewable energy. These are examples how banks show concerns about the environment. As per Giddings et al (2002), race and sex representation with regards to air travelling policies for active employees within the institution are not seen as extraordinary anymore. Furthermore, on 29 December 2003, Kofi Annan (the former UN General) stated that most people around the world are not exposed enough to financial services be it savings, insurance or credit and the real challenge here is how to make them participate in this sector.
These include commercial banks and thrift Institutions as explained below: Commercial Banks: These banks raise funds by accepting deposits on which cheques can be written, savings deposits and fixed time deposits. These banks use these funds in commercial, consumer and mortgage loans and to buy Pakistan Govt. Securities and Municipal Bonds. There are a number of Commercial banks in Pakistan and these are the largest financial intermediary and have the most diversified collections of assets. Askari Bank, Habib Metropolitan Bank, MCB, Standard Chartered Bank, Bank AlFalah, UBL, Bank AlHabib Limited, NBP, HBL, Citi Bank, Allied Bank Limited.etc.